Nokia wins injunction blocking sales of microphones for HTC One

Nokia has accused supplier STMicroelectronics of selling microphones Nokia says it developed to rival HTC, and on Monday won an injunction in the Amsterdam District Court preventing their sale.

STMicroelectronics must stop supplying HTC with the microphones used in the HTC One because they were invented by Nokia and manufactured exclusively for Nokia, according to Nokia spokesman Brett Young.

The court’s decision prevents the microphone from being sold to anyone else other than Nokia, he said. “This has immediate effect and is global in scope, not just in the Netherlands,” Young said via email. STMicroelectronics is headquartered in Geneva, but its holding company is registered in Amsterdam.

ST may not supply the microphones to other parties than Nokia until March 1, 2014, or until both parties agree otherwise in an arbitration procedure in Helsinki, the court said in its ruling. If ST continues selling the microphones it has to pay a €50,000 (US$65,000) penalty for each microphone delivered, with a maximum of €1 million, the court ruled.

Nokia filed the action against STMicroelectronics after it discovered the microphones were used in the HTC One. “HTC has no license or authorization from Nokia to use these microphones or the Nokia technologies from which they have been developed,” Young said.

All Nokia smartphones running Windows Phone 8, with the exception of the Lumia 520, use High Amplitude Audio Capture (HAAC) technology microphones, Nokia said. These microphones have the ability to capture a much broader audio range than regular phone microphones because they have two audio paths, also called dual channels. The microphones are sensitive enough to pick up the quietest sounds, but can also capture louder sounds, such as during a concert, according to Nokia.

Nokia uses single- and dual-membrane versions of the microphone in different products. The component in the HTC One, which Nokia codenames Tufnell, is the same dual membrane version used in all Nokia Lumia 720s and some Nokia Lumia 620 and 822 variants, Nokia said.

HTC not only used the same microphone, but also claims that it is a key feature for the HTC One in marketing materials, Young said. HTC describes the microphones as “high dynamic range” (HDR). Nokia called on HTC to stop copying from Nokia and start competing using its own inventions.

HTC is considering whether the ruling will have any impact on the business, an HTC spokeswoman said via email. HTC will explore alternative solutions immediately, she said. “We do not expect this decision to have any immediate impact on our handset sales,” she added, declining to comment further on the matter.

STMicroelectronics spokesman Michael Markowitz said in an email that his company intends to appeal the decision. “In the meantime, we are ready to propose alternative solutions,” he said, also declining to answer further questions.

“This is clearly not great news for HTC,” said Pete Cunningham principal analyst at Canalys. HTC could maybe try to resolve the issue with Nokia and STMicroelectronics or look for another microphone supplier, Cunningham said. But changing suppliers probably isn’t easily done, he said.

“HTC will lose momentum with the One in the market,” he said, adding that this is a setback because the One has had fantastic reviews and was very well received.

Arguably though, the decision is worse for ST, Cunningham said. HTC might be entitled to compensation from ST if it wasn’t aware of the exclusivity deal ST had with Nokia, he said. “The bigger issue though is how other suppliers are going to look to ST,” he said. The courts’ decision is not going to do very much good to ST’s reputation in the market, he added.

Nokia and HTC have been fighting each other in courts over intellectual property in several countries. Nokia has asserted more than 40 patents against HTC in Germany, the U.S. and the U.K.

On March 19, Nokia was granted an injunction against the sale in Germany of some HTC handsets that infringe on a power-saving technology for mobile phones. To start enforcing the injunction against all HTC entities in the case Nokia should pay a bond of $13.6 million, the court said at the time. This injunction is now in effect, Nokia said on Monday.

Earlier in March, Nokia lost a patent lawsuit it brought against HTC in Mannheim, Germany, over its use of the Google Play app and content store client app in Android-based devices.